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• Berkshire’s acquired around 1.87% stake in Activision in Q4 2021
• Videogame maker said more than 98% of shareholders approved the proposed transaction
Billionaire Warren Buffett said that his company Berkshire Hathaway Inc (NYSE: BRK-A) has increased its stake in Activision Blizzard Inc (NASDAQ: ATVI) in a merger arbitrage bet as Microsoft Corp (NASDAQ: MSFT) works to acquire the videogame publisher.
Berkshire currently owns about 9.5% of Activision shares, Buffett said at his company’s annual shareholder meeting in Omaha, Nebraska.
The investor said if Berkshire’s stake goes over 10%, it will issue a filing with the SEC.
“Occasionally, I’ll see an arbitrage deal and do it,” Berkshire’s chairman and CEO said.
“Occasionally, it looks like the odds are in our favor, but absolutely we can lose money on that company, fairly large sums of money, depending on what happened if the deal blows up.”
Microsoft in January offered to pay $95 per share to buy Activision Blizzard in the biggest-ever acquisition deal for the software giant as well as in what would be one of the largest mergers in US history.
Buffett said he has been buying shares of the videogame maker since the deal was announced, as the stock is trading way below Microsoft’s offer.
Activision closed at $75.60 on Friday and buying at these levels will yield a higher return if the deal closes.
Shares of the Santa Monica, California-based video game publisher jumped more than 3% on Monday after the news of Buffett’s investment was published.
“If the deal goes through, we make some money, and if the deal doesn’t go through, who knows what happens,” Buffett said.
“We don’t know what the Justice Department will do, we don’t know what the EU will do, we don’t know what 30 other jurisdictions will do. One thing we do know is that Microsoft has the money.”
Last Thursday, Activision said that more than 98% of the shareholders approved the proposed transaction.
In the fourth quarter of 2021, Berkshire first acquired around 1.87% stake in Activision Blizzard for about $1 billion in a bet the company was undervalued.
Buffett has said Berkshire “had no prior knowledge” of Microsoft’s plan to buy the company when his company made the initial investment.
Picture Credit: LiveMint
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